Re: OT-Taxpayer Surprise.

On 2008-07-15, John R. Carroll <jcarroll@ubu> wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll <jcarroll@ubu> wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll <jcarroll@ubu> wrote:
Ignoramus19502 wrote:
On 2008-07-15, cavelamb himself <cavelamb@xxxxxxxxxxxxxx> wrote:
John R. Carroll wrote:
cavelamb himself wrote:

azotic wrote:

It appears the american taxpayer will subsidize the risks
taken by sophisticated investors.






http://www.reuters.com/article/pressRelease/idUS148482+11-Jul-2008+BW20080711

Since we have a free market Freddie Mac and Fannie Mae should
be allowed to go broke.
New entities will arrise to fill the vacume left by Freddie
Mac and Fannie Mae in the mortgage
market.


Best Regards
Tom.




That's because _you_ have no money invested there...


You wouldn't be able to buy a stick of gum or loaf of bread the
day after either of these failed Richard.

I do not see any evidence for this.

Some people or businesses who invested in mortgage backed
securities that are guaranteed by these companies, would be a
little poorer without those guarantees. And home loans will be
slightly more expensive, as they should be. But I do not see a
big fallout from Fannie mae and Freddie Mac going bankrupt.

Well Iggy, here's one.
The credit markets will evaporate and that will stop bussiness in
it's tracks.

Why is that so?

Freddie and Fannie are not lending to businesses. They were lending
to home buyers.

They both get their money on the open market and if the market won't
buy their debt, it won't buy anyones.


Their debt is already bought. It is in private hands.

LOL
They sold three billion dollars worth of debt on Monday.
They will use that money to buy mortgages from the original lenders and
brokers.
That's how the system works.
The only thing in private hands are the debt and equity that these guys
offer.



Yes, and brokers will sell debt through new means, vehicles etc.

Possibly these new means will require better capitalization of homes
and better returns (interest rates).

I do not see what the big deal is.

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Relevant Pages

  • Re: OT-Taxpayer Surprise.
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  • Re: OT-Taxpayer Surprise.
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